Simpler

If you run your own company, chances are you’ve tried calculating something before.

Quite often, you start with a relatively simple question. How many salespeople do we need? How many users will we have next month? How many people can we afford to hire?

But then, it gets much more complicated very quickly. Figuring out the number of salespeople becomes about all the different kinds of tasks they may be doing, about your future hires’ individual preferences and personalities, about whether you want to be the kind of company that sets targets – and that last thing alone can be a three-month “company vision and values” exercise. By the time you dive into any of this, you may forget what the question that led you there was, let alone the answer to it.

It doesn’t have to be this way. Instead, think – what’s the minimum viable calculation that would give us a directionally helpful answer?

If we assume that one salesperson is able to have 20 calls or meetings per week, and closes one deal for every 5 conversations, and you want 1,000 new customers next year with sales being the primary way of getting them, you need about 6 salespeople. (I additionally assumed they spend about 220 days in a year actually selling, after accounting for holidays, trainings, and so on; so that gives you 44 weeks selling, in which they’d have 880 conversations each (44*20), from which they close 176 deals (880/5). If you want 1,000 new customers, 1,000/176 = 5.7, so let’s round it up and say you need 6 salespeople.)

Of course, this may not be super precise, but the logic is there, you just need to use numbers that make sense for your company (maybe your salespeople have 30 conversations per week and convert every third). If you do a simple calculation like that, your result will be a good starting point – and you got there in about five minutes.

Then you can do a more detailed one, but I highly recommend only doing that once you have this basic thing on paper, and you believe it’s worth digging deeper. Nine out of ten times, it won’t be.

How many decisions that you need to make this week would benefit from a minimum viable calculation?

Love and cash flow,

Jana

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